I’ve gotten two kinds of universal comments from residents over the last 25 years. First, “I didn’t do it soon enough,” and second, “This was far better than I ever expected.” When people move into a social-based retirement community, they find that the engagement, the excitement, and the involvement way exceed their expectations.
Do you think the housing market has played any role in this shift in the American dream?
You have to pay attention to housing markets, but they’re not as pivotal as you think they are in retirement years. Most people in Middle America have accumulated their equity in their home, and when the housing market has an up or a down, you’ll have some adjustments in the amount of equity that you have.
A perfect example is right now. Housing was over-fueled for three years by excessively low interest rates, and excessively low interest rates push housing values way up because people can buy bigger houses with the same mortgage payment. When interest rates are artificially low for too long, the housing market softens when they go back up.
Now, if you’ve been in your house for 25 years, the difference of whether you caught the cycle at its absolute peak or when it was backing off is not very consequential when you consider your life earnings.
The reality is that you shouldn’t hold on, particularly in retirement because you’re now entering a period when you want to get the most out of life. What you really want to do is take the discount. The nice thing about it is that you’re not like the people with 95% mortgages. You can take the $10,000 or $25,000 discount on the price, and your house will be the next one on the block to sell.
But some people get paralyzed. You want to make sure that you get the most value you can and then move on because it’s not going to be easier. Five years later, you may get a few more dollars in value, but you’ll trade that off in much more complicated moves, probably some deterioration in lifestyle, and real opportunity loss in what you could’ve been doing.
What was it that drew your attention to this?
I had one of my earliest experiences in housing with seniors back in the 1970s. I built what I call “leisure housing” for the active adult—55-and 60-year-olds moving to Florida to play golf— and that’s where the concept stuck in the back of my mind.
For every one that came to Florida, 20 stayed home. And when the 20 that stay home move up to about 75, that’s when they’re going to start experiencing the losses of the social environment. People will say, “I shouldn’t drive anymore at night. A number of my neighbors moved away, and I’m much more isolated where I am.”
Being by yourself in a leftover house where the kids are gone is clearly not the answer. The steps are hard for people with arthritis, so they tend not to get the utilization out of [their home] that they should. The family becomes more dispersed as people get older, so it doesn’t have the collection value that it used to. Then you have all of the maintenance issues. There’s much better use of your time and energy when you’re 75 than maintaining your home.
One gentleman moved to one of our communities and became vice president of the wood shop building cabinets for Habitat for Humanity and making toys for kids at Christmas. He had an engagement that he hadn’t experienced in years. That’s really the difference between the social living you get in a community environment and what you get if you tough it out in this “aging in place” concept.
And once residents settle in, the quality of time improves, and that’s generally what the residents that I’ve talked to have said. “I get more time with my kids. I’m spending more time doing things on the weekends with the grandkids.” That’s a really nice benefit that comes from living in our communities.
Next month, John Erickson talks about the challenges behind creating communities that enhance people’s lives and what he means when he says “your retirement years are your freedom years.”